What APRA's Debt-to-Income Lending Limits Mean for Your Borrowing Power
What APRA's Debt-to-Income Lending Limits Mean for Your Borrowing Power
If you've been planning to buy a home or investment property in 2026, you may have heard that the rules around borrowing have changed. From February 2026, the Australian Prudential Regulation Authority (APRA) tightened restrictions on high debt-to-income(DTI) lending and if you're a higher-income earner or a property investor, this could directly affect how much you're able to borrow.
Here's what you need to know.
What Is a Debt-to-Income Ratio and Why Does It Matter?
Your debt-to-income ratio is simply the total amount you owe across all debts (including your proposed home loan) divided by your gross annual income. For example, if you earn $150,000 a year and want to borrow $900,000, your DTI ratio would be 6x.
APRA now requires lenders to limit the share of new loans written at high DTI ratios, typically considered to be 6x or above. This means lenders have a cap on how many “high DTI" loans they can approve across their entire book. Once they hit that internal limit, your application could be declined or reduced, even if you can comfortably make the repayments on paper.
The higher your income, the more likely you've relied on being able to borrow at a highermultiple. That's why this change is catching some borrowers offguard.
Who Is Most Affected?
While it might seem counterintuitive, higher income earners and property investors are the two groups most likely to feel the squeeze.
High-income professionals, think dual-income couples, specialists, or senior executives, often borrow large amounts relative to their income because lenders have historically been comfortable doing so. Under the new DTI caps, that comfort has a ceiling.
For investors, the impact is compounded. Every investment property you hold adds to your total debt load. If you already own one or two properties, your existing debt could push your DTI ratio over the threshold before you've even applied for the next loan, limiting your ability to grow your portfolio.
How to Protect Your Borrowing Power
The good news: there are practical steps you can take now to put yourself in the best position.
- Pay down non-property debt first. Credit cards, car loans, and personal loans all count toward your total debt figure. Reducing these lowers your DTI ratio and frees up borrowing capacity.
- Review how your loans are structured. The way debt is held across individual names, joint names, or entities (like trusts or companies) can influence your DTI calculation.Getting this right before you apply matters.
- Don't wait until you're ready to buy. Lenders and their policies shift frequently. Knowing where you stand now, before you've found the property, means you can make adjustments with time on your side.
The Bottom Line
APRA's DTI changes are designed to reduce systemic risk in the lending market, but for individual borrowers, the impact is very real. Understanding how these rules apply to your specific situation is the difference between being ready to act when the right property comes up and missing out.
Here's something most borrowers don't realise: just because one lender says no doesn’t mean they all will. Because DTI caps are applied at the individual lender level, some lenders will have more capacity than others at any given time and that changes regularly.
At Kredi Home Loans, we have access to over 40 residential lenders. Part of what we do is research which lenders currently have capacity to approve high DTI loans, so even if your bank or another lender has hit their internal limits, we can find one that hasn't.
Ready to find out what you can actually borrow? Book a free strategy call with the Kredi team. We'll assess your position across our full lender panel and find you the best path forward.